By Maria Armental
Chinese gaming and Internet giant NetEase Inc.'s first-quarter
profit rose 13% as revenue surged, driven by online games and
related content.
The company's American Depositary Shares, up 82% over the past
12 months, rose 4% in late trading to $135.40, topping the
52-week-high of $131.52 set earlier Wednesday during regular
trading.
NetEase, which generates the bulk of its revenue from
videogames, operates Activision Blizzard Inc.'s gaming platform
battle.net along with "World of Warcraft" and other franchises in
China. Last year, China surpassed the U.S. as the world's largest
online retail sales market by dollars spent, according to U.S. and
Chinese government data.
In February, NetEase set up a base of operations in Redwood
Shores, Calif., to focus on mobile games for Western audiences. The
team's planned first release, "Speedy Ninja," is a sequel to "Ninja
Must Die," adapted for Western audiences, the company said.
At the same time, the Beijing company has been expanding
operations, building on China's thriving mobile and e-commerce
markets. It has launched an online payment platform and a
cross-border e-commerce platform, Kaola.com. On Thursday, company
officials said Kaola has performed well so far and they plan to add
more products to the site.
For the most recent period, NetEase posted a profit of 1.26
billion yuan ($204 million), or 9.60 yuan an ADS, up from 1.12
billion yuan, or 8.63 yuan an ADS, a year earlier. Excluding
stock-based compensation, the profit was 10.81 yuan an ADS,
compared with 9.04 yuan an ADS a year earlier.
Net revenue jumped nearly 55% to 3.66 billion yuan.
Analysts surveyed by Thomson Reuters were expecting a profit of
8.69 yuan an ADS on revenue of 3.2 billion yuan.
Revenue from online games rose 44%, while advertising revenue
rose 36%; and revenue from its email, e-commerce and other services
segment surged to 448.4 million yuan from 118.6 million yuan a year
earlier.
Operating expenses more than doubled to 1.17 billion yuan in the
latest period, as the company continued to invest in marketing and
hired more workers.
Dollar conversions were based on the noon buying rates specified
by the Federal Reserve on March 31.
Write to Maria Armental at maria.armental@wsj.com
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